USDA Feed Outlook

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18 September 2012

USDA Feed Outlook - September 2012

Higher Carryin Boosts U.S. Corn Supplies Despite Production Decline

U.S. feed grain supplies for 2012/13 are projected higher this month, with a reduction in forecast corn production more than offset by higher projected corn carryin. U.S. corn production is lowered 51 million bushels, with the national average yield forecast 0.6 bushels per acre lower at 122.8 bushels. U.S. corn supplies for 2012/13 are projected 108 million bushels higher at 11,983 million bushels as an increase in expected beginning stocks more than offsets lower production. Feed and residual use for 2011/12 is lowered 150 million bushels based on the record level of crop maturity and harvest progress as of September 1. Early new-crop corn use is expected to displace use of 2011 old-crop corn and boost old-crop inventories on September 1.

Total U.S. corn use for 2012/13 is raised this month to 11,250 million bushels, with higher expected feed and residual disappearance more than offsetting lower projected exports. The projected season-average price for corn was reduced $0.30 on each end of the range to $7.20 to $8.60 per bushel. World 2012/13 coarse grain production is reduced this month, mostly due to drought in the EU, cutting corn prospects. Forecast corn exports from South America are increased.

Corn Harvested before September 1, 1990-2012F

Sources: USDA, National Agricultural Statistics Service, Quick Stats and USDA, World Agricultural Outlook Board, WASDE

Domestic Outlook

Feed Grain Supply Advances in Spite of Lower Projected Corn Yield

The U.S. 2012/13 feed grain supply is forecast at 321.4 million metric tons, up 2.7 million from last month’s forecast and 37.0 million below last marketing year. An increase in the feed grain supply is projected despite a reduction in estimated corn and sorghum yields and subsequent production because carryin stocks are projected higher. A decline in feed and residual use in 2011/12 is the primary contributing factor to the 4.1-million-ton increase in beginning stocks this month. Forecast feed grain production, at 284.5 million tons, is 1.3 million below last month’s forecast and 39.0 million below last year.

Projected feed grain use for 2012/13 increased 0.6 million tons as larger forecast feed and residual use offset a decline in exports. Total use is forecast 25.5 million below last year at 300.1 million tons, compared with the 2011/12 estimate of 325.6 million. Feed and residual disappearance is projected 1.9 million tons higher this month, in part reflecting growth in expected September-December corn disappearance with an expected rise in early new-crop usage during the 2011/12 marketing year. Exports were lowered 1.3 million tons from last month’s forecast to 34.6 million. Ending stocks are forecast 2.1 million tons higher than last month’s forecast, to 21.3 million.

Feed Use

When converted to a September-August marketing year, U.S. feed and residual use for the four feed grains plus wheat in 2012/13 is projected to total 114.3 million tons, 0.2 million higher than last month’s estimate and 9.6 million below the 2011/12 revised estimate of 123.9 million. Corn is estimated to account for 92 percent of feed and residual use in 2012/13, up from 90 percent the previous marketing year.

US Feed Grain Production

Source: USDA, Foreign Agricultural Service, Grain: Word Markets and Trade (Grain Circular).

US Corn Harvested Area and Yield

Sources: USDA, National Agricultural Statistics Service, Quick Stats and USDA, World Agricultural Outlook Board, WASDE.

The projected index of grain-consuming animal units (GCAU) for 2012/13 is 91.9, down from 92.1 last month and 1.5 lower than last year’s estimate. The grain used per GCAU is 1.24 tons, unchanged from last month and 0.1 ton lower than 2011/12. In the index components, GCAUs are decreased for cattle on feed, other beef cattle, and broilers from last month.

USDA’s Quarterly Hogs and Pigs report will be released on September 28th and will provide an indication of sow farrowing intentions into early 2013. Higher feed grain prices are a contributing factor to the lower carcass weights that are forecast for the second half of the year and will ultimately contribute to a net reduction in pork production.

Corn Yield Trimmed, Dampening Production Prospects

A 0.6 bushel per acre reduction in forecast yield pushed production down 51 million bushels from last month’s forecast to 10,727 million bushels. Based on September 1 conditions, the national average corn yield is forecast at 122.8 bushels per acre, 24.4 bushels below last season’s estimated yield. The current yield is the lowest since 1995/96, and production is forecast to be the lowest since 2006/07 when 18.1 million fewer acres were planted. Both planted and harvested acreage estimates are unchanged from last month.

Projected beginning stocks for 2012/13 are raised 160 million bushels due to reduced use in 2011/12. With imports unchanged, higher carryin offsets production declines, resulting in higher projected supply. At 11,983 million bushels, projected supply is 108 million greater than last month’s projection and 1.5 million bushels below the last marketing year. Estimated supplies for 2011/12 are unchanged this month.

US Cash Corn Prices, Number 2 Yellow at Selected Locations, Monthly

Sources: USDA, Economic Research Service, Feed Grains Database and USDA, Agricultural Marketing Service, http://marketnews.usda.gov/portal/lg.

The projected range for the 2012/13 season-average corn farm price is decreased 30 cents on both the high and low end to $7.20 to $8.60 per bushel, reflecting larger supplies and higher ending stocks.

Sorghum Production Nearly Unchanged

A slight reduction in the forecast U.S. sorghum yield resulted in a production forecast of 246.0 million bushels, down 1.6 million bushels from last month. Forecast production is 31.6 million bushels higher than last season’s harvest of 214.4 million bushels. The 2011/12 harvest was the lowest since 1956 when a harvest of 204.881 million bushels was observed. The 2012/13 harvest remains on track to be the second lowest since the mid-1950s.

Based on September 1 conditions, the sorghum yield forecast is decreased 0.3 bushels per acre to 48.3 bushels. Yields are 6.3 bushels per acre lower than last season due to persistent drought in many southern sorghum growing areas, including Missouri, Kansas, Nebraska, and Texas. The 2012/13 forecast yield is slightly higher than the most recent low of 46.4 bushel per acre in 1980.

Sorghum use is unchanged from last month’s forecast; the decline in production results in a 1.6-million-bushel reduction in projected ending stocks.

The projected range for the 2012/13 season-average sorghum farm price is lowered $0.20 on each end of the range to $6.80 to $8.20 per bushel, reflecting greater supplies of feed grains.

US Grain Sorghum Prices, Number 2 Yellow at Selected Locations, Monthly

Sources: USDA, Economic Research Service, Feed Grains Database and USDA, Agricultural Marketing Service, http://marketnews.usda.gov/portal/lg.

No Change to Barley and Oats Production

Production forecasts for U.S. barley and oats are unchanged from August. Supply and use projections are also unchanged. Final estimates for 2012 will be reported in USDA-NASS’s Small Grains 2012 Summary to be released at the end of this month.

The 2012/13 season-average farm price for barley is projected to remain at $6.25 per bushel with a spread of $5.75 to $6.75. Feed barley prices are down slightly this month from the previous estimate though they have risen 17.6 percent over those of the previous year, in correlation with drought-influenced corn prices, to $5.75 per bushel. Even with increased domestic stocks forecast for 2012/12, the malt barley price is up 17.1 percent over that of the previous year and is adjusted upward from last month’s estimate to $6.40 per bushel. The 2011/12 estimated price for all barley is unchanged at $5.35 per bushel.

The 2012/13 projected oats price is lowered $0.20 per bushel at the mid-point of the range this month. Lower projected corn prices are the major driver of the downward adjustment. The projected range is also tightened to $3.40 to $4.20 per bushel, compared with $3.50 to $4.50 per bushel last month. The 2011/12 estimated price for oats remains at $3.49 per bushel.